High oil prices are good for Texas

At least, they're good for the budget.

The nation may be on the verge of a recession, but the Texas economy is doing well enough for Comptroller Susan Combs to predict Tuesday that the Legislature will have a $10.7 billion surplus when it convenes in January.

Much of the extra money can be attributed to record oil prices. While motorists are being socked with ever-increasing gasoline costs, oil and gas employment in Texas has been booming, the comptroller's office reported.

If Combs' early forecast holds up, Gov. Rick Perry would like to return part of the money to the taxpayers in the form of tax cuts or rebate checks, spokesman Robert Black said. But those steps would need legislative action.

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"With a surplus of this magnitude, I know the governor believes we need to look at some sort of tax relief, whether it be on property taxes, business taxes or some type of actual rebate, like the federal government can do but we haven't been able to," Black said.

The last installment of school property tax cuts ordered by Perry and the Legislature in 2006 went into effect last year, but much of the savings already has been eroded by rising property values and appraisals.

An expanded business tax, enacted to help pay for the property tax reductions, is still untried and under fire. Companies had until May 15 to file their first reports under the new levy, and Combs recently extended that deadline by 30 days.

Perry floated the tax rebate idea in the 2007 session, but it went nowhere. It would require a constitutional amendment, including a two-thirds vote in both the House and the Senate plus approval by Texas voters.

Black acknowledged that there will be a need for increased spending on crucial needs, such as Medicaid and public education, including higher fuel costs for school buses, and the Legislature will have to balance those demands.

But, he added, the governor wants to keep Texas' economic engine "going and growing."

In budget-preparation instructions this week, the governor's office and the Legislative Budget Board asked agencies to submit zero-growth spending requests plus options for reducing spending by 10 percent.

I'm glad to see that the need to spend more on things like education, if only to cover rising costs, has been acknowledged by the Governor's office. Let's just say that I'm skeptical about the words getting translated into actions, however. I think there's going to be a lot of pressure to cut or even abolish the business margins tax, and I fear that will be given priority. As always, the best way to ensure that education isn't given the shaft is to make sure we have a Speaker who actually cares about it. You know what that means.

Posted by Charles Kuffner on May 07, 2008 to Budget ballyhoo